Barrick Gold Corporation (USA) (ABX), Newmont Mining Corp (NEM), & Buying This Slump

On that score, a mine project in Peru is facing troubles and a big project in Australia hasn’t turned out to be as profitable as hoped. And a project in Indonesia is progressing, but has notable risks associated with it. On the flip side, domestic mine expansions appear to be going well.

Newmont Mining Corp (NYSE:NEM)’s dividend is tied to gold. While the yield is closing in on 5%, the recent drop in gold prices could lead to a dividend cut. For income investors who think gold is likely to stabilize or head higher after a brief correction, however, this could be a good time to buy.

High Costs

Both Newmont Mining Corp (NYSE:NEM) and Barrick have about average costs within the industry. And both are largely in stable markets. Gold Fields Limited (ADR) (NYSE:GFI), on the other hand, is heavily concentrated in South Africa and its production costs tend to be on the high end of the industry. That makes the company a high-risk play on gold prices.

That said, the company is trying to diversify its asset base somewhat. That process, however, will be a long one in the making. In fact, the company has some interesting projects on the drawing board, they just won’t be helpful in the near term. So this miner remains most appropriate for aggressive investors looking for a gold rally after the sell off.

Watch or Invest?

GLD data by YCharts

Commodity prices are hard to predict and gold has sold off hard and fast. Although that may or may not be a buying opportunity, it does suggest that investors should take the time to examine the sector. The three stocks above all have unique aspects to their businesses that could make them potential investment candidates. It’s hard to buy when everyone is selling, but that’s often the best time to go shopping.

The article Buying the Gold Slump originally appeared on Fool.com and is written by Reuben Brewer.

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